Rents expected to rise by Christmas as landlord supply remains tight

Rents expected to rise by Christmas as landlord supply remains tight

The Royal Institution of Chartered Surveyors (RICS) latest survey shows lettings agents expect rents to increase by Christmas amid rising tenant demand and limited new landlord instructions, continuing a trend of constrained rental supply.

The RICS monthly market snapshot for September 2026 highlights a sustained increase in tenant demand, marking the third consecutive month of growth. Despite this, the flow of new landlord instructions remains subdued, resulting in a tight lettings market. A net balance of +37% of survey respondents anticipate rent rises by Christmas, a figure above the average seen earlier in the year but slightly below August’s peak.

Sales market conditions remain challenging, with buyer demand subdued and agreed sales falling, though some signs of increased supply have emerged. House prices continue to face downward pressure. The lettings market dynamics, however, suggest landlords and agents should prepare for rent increases in the coming months.

RICS survey findings on lettings and sales markets

The RICS survey gathers views from its members, including letting agents and surveyors, offering a broad indication of market trends rather than specific price data. In September, lettings agents reported increased tenant demand for the third month running, while landlord instructions remained low. This imbalance is a key driver of rental price pressures.

The net balance of +37% expecting rent rises by Christmas is lower than August’s +44% but well above the +27% average recorded in the first half of 2026. This suggests a sustained expectation of rental growth despite some moderation.

In the sales market, buyer demand has weakened, with the net balance for new buyer enquiries falling to -22% in September from -18% in August. Agreed sales also declined, with a net balance of -18%, though this remains better than the recent three-month average of -25%. The outlook for sales over the next three months has softened further, with a net balance of -6%.

There are tentative signs of increased supply in the sales market, with new sales instructions moving to a positive net balance of +6%, the first since mid-2025. However, market appraisal activity remains below levels seen a year earlier. House prices continue to face downward pressure, with the net balance for price changes falling to -32% in September from -28% in August.

Context of rental market pressures and landlord supply

The lettings market has been under pressure due to a combination of rising tenant demand and limited new landlord supply. Factors such as increased costs for landlords, regulatory changes, and economic uncertainty have contributed to a cautious approach by some landlords, reducing the number of properties coming to market.

Rising tenant demand can be linked to affordability challenges in homeownership and population growth in certain areas. The imbalance between high demand and low supply naturally puts upward pressure on rents, as competition for available homes intensifies.

While the Renters’ Rights Act and other regulatory reforms aim to improve tenant protections, they have also influenced landlord behaviour, with some landlords exiting the market or reducing their portfolios. This further tightens supply and contributes to rental price increases.

Practical implications for landlords and letting agents

Landlords with portfolios should anticipate potential rent increases by the end of the year. This may provide an opportunity to review rent levels at tenancy renewals, ensuring they reflect current market conditions and cover rising costs such as energy efficiency improvements and maintenance.

Letting agents should prepare for increased demand from tenants and advise landlords on realistic rent adjustments. Maintaining good communication with tenants about rent changes and market conditions will be important to manage expectations and reduce disputes.

Given the subdued flow of new landlord instructions, agents may need to focus on retention strategies and property management efficiency to maximise returns for existing landlords. Monitoring local market trends and licensing requirements remains essential.

Uncertainties and factors to monitor going forward

While the RICS survey provides useful insight, it does not specify exact rent levels or regional variations, which can be significant. Landlords and agents should watch for official data releases and local market reports to inform decisions.

Economic factors such as inflation, interest rates, and government policy changes could alter demand and supply dynamics. The impact of ongoing regulatory reforms, including any further amendments to tenancy laws or landlord obligations, also remains to be seen.

Monitoring tenant affordability and potential changes in demand patterns will be critical, especially if economic conditions shift unexpectedly. The balance between encouraging landlord supply and protecting tenant rights continues to be a delicate policy challenge.

Considerations for landlords preparing for rent changes

• Review tenancy agreements to ensure rent review clauses comply with current legislation and allow for fair adjustments.
• Keep detailed records of market research and communications with tenants regarding rent changes to support transparency and compliance.
• Check local licensing and safety requirements to avoid penalties that could affect rental income.
• Plan for possible increases in maintenance and compliance costs that may impact net returns.
• Stay informed on regulatory developments affecting possession procedures and tenant rights.

Supporting landlords through changing rental conditions with TLA

The Landlord Association (TLA) offers members access to up-to-date compliance resources and practical guidance tailored to evolving rental market conditions. Through TLA’s BETA testing of ORBIT, landlords and letting agents can organise property records, manage tenancy documentation, and track key compliance activities efficiently.

ORBIT’s developing features include tools to record rent reviews, inspections, and communications, helping landlords maintain evidence of compliance and prepare for rent adjustments. Membership also provides access to expert support on regulatory changes, enabling landlords to adapt to market shifts with confidence.

Exploring TLA membership and ORBIT BETA access can assist landlords in managing portfolios effectively amid rising rents and constrained supply, ensuring they meet legal obligations while optimising rental income.

Looking ahead, landlords should remain vigilant to market signals and regulatory updates, balancing rent increases with tenant retention to sustain long-term portfolio performance.

Sources: Letting Agent Today